Tuesday, November 29, 2016

Trump and Carrier Air Conditioners

UPDATE -- DEC 1ST: #Trump LIVE streamed at #Carrier plant in #Indianapolis https://www.youtube.com/watch?v=h5fbu7BjpUc

The air conditioner company Carrier has been in discussions with the incoming Trump administration (including Vice President-elect Mike Pence) about a plan to move about 2,000 jobs from Indiana to Mexico. Carrier is a unit of United Technologies, a leading defense contractor. [Big companies have been swallowing up smaller companies in a record number of mergers and acquisitions, rather than giving their employees raises. Stock prices on the Dow Jones are up 160% and currently at record highs since the March 2009 lows, but wages aren't up 160%]

Dow Jones Record High

Carrier drew national headlines in February when when a cellphone video went viral of the bosses' announcement to workers that the company would move (what was then) 1,400 jobs from Indianapolis to Mexico. Candidate Donald Trump seized on the issue, threatening that, if elected, he'd slap a steep tariff on any air conditioners imported back to the U.S.

On Thursday President-elect Trump tweeted that he was "working hard, even on Thanksgiving to get Carrier A.C. Company to stay in the U.S." These efforts were "MAKING PROGRESS," Trump wrote, and "will know soon." Carrier tweeted: "Carrier has had discussions with the incoming administration and we look forward to working together. Nothing to announce at this time."

Wall Street Journal: Deal for Carrier to Keep U.S. Plant Open May Hinge on Tax Overhaul

But if the Wall Street Journal's account is correct, Trump is no longer threatening Carrier with a steep tariff; instead, he's considering a tax cut (even though Trump couldn't deliver that without approval from Congress). According to "a person familiar with the discussions," the Journal reports, the discussions have included "the company's wishes for a tax overhaul that Mr. Trump and Republicans have promised to pursue early in his administration." (That's the Journal's paraphrase, not a quote.)

The bone of contention appears to be taxation of overseas profits. "United Technologies, like other globalized U.S. companies ... has large reserves of cash overseas--profits that corporations are waiting to repatriate to the U.S. until Congress cuts the level of tax they would pay," the Journal writes. "The company reported that 85 percent of its total cash, or more than $6 billion, was overseas, as of the end of 2015. One idea backed by House Republicans but not Mr. Trump would be to create a two-tiered tax rate that would help companies that have used foreign profits for factories and other assets they can't easily repatriate."

The Journal doesn't flat-out say so, but its story seems to suggest that the swap under discussion is that if Trump (and, presumably, Congress) make it easier for Carrier to repatriate U.S. dollars, Carrier will keep the 2000 jobs, or some fraction of them, in Indiana. But if that's the bargain, it's hard to see how either side will enforce it. And it sure doesn't have the same populist ring as "We're going to tax you when those air conditioners come - so stay where you are or build in the United States."

Sanders Statement on Carrier and Outsourcing

Sen. Bernie Sanders (I-Vt.) wants Trump to keep his promise not to let Carrier export those 2,000 jobs. But Bernie's plan (like Trump's original tariff threat) is more stick than carrot. Sanders would prevent companies that outsource jobs from receiving federal contracts; tax companies that outsource jobs; and tax the compensation of executives whose companies send jobs overseas. The Sanders bill would also "require all companies that outsource more than 50 jobs in a given year to pay back all federal tax breaks, grants and loans they have received from the federal government over the last decade." Given the GOP's control of Congress, the likelihood that Sanders' plan will pass is pretty remote - even if he can sell it to Trump.

///////////// UPDATE 111/30/2016 /////////////////\


President-elect Donald Trump surprised skeptics Tuesday night by fulfilling a campaign pledge to save "close to 1000" jobs at a Carrier Air Conditioning plant in Indianapolis, according to a company tweet. Trump himself tweeted late Tuesday that he and Pence will travel to Indiana Thursday to announce the deal ("Thanks Carrier").

Carrier, a unit of United Technologies, became a punching bag for candidate Trump in February after a cellphone video went viral of the bosses announcing the impending loss of 1400 jobs (eventually that climbed to 2000). The deal, much of it negotiated by Vice President-elect Mike Pence's staff in Indiana - where he's still governor until Jan. 20 - extends state tax credits to Carrier.

In addition, the New York Times reports, Trump has agreed to "tone down" his threats to slap a 35 percent tariff on air conditioners that Carrier imports from Mexico back to the U.S.

NEW YORK TIMES: Trump to Announce Carrier Plant Will Keep Jobs in U.S.

"The victory is largely a symbolic one," write POLITICO Pro's Cogan Schneier and Timothy Noah, "given that the U.S. has been losing more than 300,000 manufacturing jobs each year to overseas competition." And it "doesn't present much of a model moving forward for reversing deindustrialization."

University of Michigan economist Justin Wolfers tweeted Tuesday night: "Every savvy CEO will now threaten to ship jobs to Mexico and demand a payment to stay. Great economic policy." Still, Schneier and Noah write, "Trump's credibility as a tribune of the working class should get at least a brief reprieve."


Wall Street Journal: Small Businesses Lament There Are Too Few Mexicans in U.S., Not Too Many

Trump campaigned on a promise to seal the border with Mexico and stem the flow of undocumented immigrants who undercut U.S. wages. But small business owners see the opposite problem, according to Miriam Jordan and Santiago Pérez of The Wall Street Journal:

"As hiring accelerates and the labor market tightens thanks to a steady U.S. recovery, employers who need low-skilled workers are increasingly struggling to fill vacancies," they write. "One big reason: Mexican workers, who form the labor backbone of industries like hospitality, construction and agriculture, are in short supply." [These are "small" businesses? Hedge funds are also considered "small" businesses because they have so few employees.]

The Journal cites a roofing company in Dallas that turned down $20 million in contracts during the past two years because it didn't have enough workers. Tacolicious, a Bay Area restaurant chain, faces similar difficulties recruiting staff, and says it must scale back future expansions as a result. Don't tell the president-elect - we don't like to upset him! - but the number of Mexicans who enter the U.S. illegally has dropped significantly in recent years. The "mass migration from Mexico is over," according to Pia Orrenius, senior economist at the Federal Reserve Bank of Dallas.

"Multiple factors are behind the decline," write Jordan and Pérez. "The Mexican families are smaller and their children are better educated; some Mexican states have launched campaigns to discourage youngsters from making the perilous journey north; and smugglers are commanding higher prices to get migrants through territory often controlled by drug gangs and across a far more secure border than ever before."

Diminished border crossing by Mexicans means the boost in wages that Trump promises for U.S. workers is already happening for some of them. "On the ground in the U.S., many employers report the worker shortage is driving up wages, which is good news for low-skilled workers. It is also driving up costs, however, which could hamper investment and fuel inflation."


An NLRB administrative law judge found the dismissal of a UPS worker was "tainted" by management's desire to halt union activity, according to a decision issued Friday. The judge found UPS violated the NLRA when it fired Robert Atkinson, a shop steward at a Pittsburgh-area facility who acted as a liaison between the Teamsters Local 538 and managers. Atkinson had campaigned against a collective bargaining agreement between UPS and the Teamsters; the judge found he was fired for refusing to support the deal. But the judge also ruled that due to Atkinson's misconduct - he suggested on social media that a manager had erectile dysfunction, among other comments - Atkinson be awarded only partial back pay and not be reinstated.


California's largest state-employee union plans to strike Dec. 5, the Sacramento Bee reported last week. The 95,000-member SEIU [who endorsed Clinton over Sanders] Local 1000 represents teachers, accountants, librarians, custodians, laundry workers, and nurses, among other occupations. The local says it's unable, after seven months, to resolve its differences with state officials over a new contract. "The union has denounced the administration's proposed wage increase of 12 percent over four years as inadequate because it fails to address what it contends are gender pay inequities in the state workforce," the Bee reports. "It also objects to the administration's proposal that employees pay more for their health benefits." The strike is set to last just one day, but the Bee's Alexei Koseff points out that state employees don't typically follow through on such threats. "While the possible work stoppage would be unprecedented," he writes, "it might also be illegal: Local 1000 has a no-strike clause in its contract." More here. http://www.sacbee.com/news/politics-government/capitol-alert/article117028358.html [Too bad Social Security recipients didn't get a raise of 12% over 4 years.]


  1. Trump, Pence set to unveil deal to keep 1,000 Carrier factory jobs in Indiana

    Originally published November 29, 2016 at 5:11 pm Updated November 29, 2016 at 7:49 pm


  2. After Trump pledged to keep Carrier jobs in U.S., company says it won’t move nearly 1,000 to Mexico

    The incoming Trump administration scored a victory last night when Carrier announced an agreement to keep a factory in Indiana that it had planned to close. The deal, reportedly spearheaded by Pence, keeps in the Hoosier State more than 1,000 jobs that were slated to be outsourced to Mexico. But, but, but: We don’t know what kind of sweetheart deal Carrier might have been promised and whether both sides are inflating the numbers to make themselves look good. “Many questions remain open,” Jim Tankersley, Danielle Paquette and Max Ehrenfreund report. “It was unclear whether 1,000 new jobs were being saved in the U.S. or whether that figure included 400 jobs the company agreed to preserve earlier this year under pressure from Indiana officials. It's also not clear whether any incentives were offered to keep said jobs in the state.”

    Carrier suggested Trump convinced it to keep close to 1,000 jobs in the United States:

    Trump will hit the road tomorrow to talk about it:

    Washington Post:

  3. ///////////////////// UPDATE ////////////////////////

    Donald Trump and Mike Pence head to Indianapolis today to announce their deal with United Technologies Corp. to keep what Fortune Editor Alan Murray reports to be 850 jobs at its Carrier plant there. Carrier announced in February that it would move 1,400 jobs from its plant in Indianapolis to Mexico. A cellphone video of the announcement went viral, prompting candidate Trump to threaten a 35 percent tariff on products that Carrier manufactured in Mexico and imported back to the U.S.

    How Donald Trump Sealed the Deal to Keep Carrier Jobs in the U.S.

    Trump and Pence brokered a deal with UTC that includes $700,000 in state tax breaks from the Indiana Economic Development Corporation, a quasi-public entity that doesn't need to get approval from the state legislature. Former Indiana Lieutenant Governor John Mutz, who sits on the IEDC's board, told POLITICO's Matthew Nussbaum that Carrier turned down a similar offer from the agency before the election. Why bite now? Mutz "thinks the choice is driven by concerns from Carrier's parent company, United Technologies, that it could lose a portion of its roughly $6.7 billion in federal contracts." Carrier plans to meet with the United Steelworkers to discuss the agreement before Trump and Pence arrive, USW District 7 Director Mike Millsap told Morning Shift.

    White House spokesman Josh Earnest touted the Carrier deal Wednesday as "good news" before adding, "if [Trump] is successful in doing that 804 more times, then he will meet the record of manufacturing jobs that were created in the United States while President Obama was in office." In a similar vein, the Nobel-prizewinning economist and New York Times columnist Paul Krugman tweeted: "Trump would have to do one Carrier-sized deal a week for 30 years to save as many jobs as Obama's auto bailout."

    Press Briefing by Press Secretary Josh Earnest, 11/30/2016

  4. I agree with Sanders assessment of the situation. It's still a race to the bottom and hardly standing up to the globalized corporations. UTC is keeping a "portion" of the jobs in Indiana in exchange for tax cuts. I'll gladly pay the $100.00 upon trump's first tariff.

  5. #Trump LIVE streamed at #Carrier plant in #Indianapolis


  6. Fox News reports: It will cost Indiana $7 million a year in tax breaks for Carrier to save 800 jobs. (That's $8,750 per job per year.)

  7. i had long admired your research and commitment to unwinding the BS behind the republican fraudsters. And i am fully aware the same applies to democrats. But now that you are not allowing dissenting points of view, i'm afraid i will stop reading your blog.

    Best Rgs Allen.

    here is a link to the type of argument Senator Sanders made regarding the carrier "deal": http://www.motherjones.com/politics/2016/11/indiana-manufacturing-deal-trump-pence-carrier

    1. Those excerpts in this post were from Politico's newsletter and were their links provided ... I wasn't taking sides on the story. Bernie brought up some good points, but there was much more to that deal than just bribing Carrier to stay in Indiana with tax incentives. Gov. Pence made them that same offer long before Trump got involved, and they rejected it. I suspect Carrier's parent company was threatened by Trump with a 35% tariff and a withdrawal of federal defense contracts. It probably wasn't mentioned so the CEO could save face, and they publicly behaved in a spirit of co-operation. States make deals like that all the time with tax incentives to get companies to remain in their State. Trump has repeatedly said on the campaign trail that his main concern was to keep jobs in the country, but that States would still compete among themselves.

      As for Bernie Sanders, IMHO, he has become too hyper-partisan and falsely accused Trump of racism and other things -- and that really turns me off. I lost respect for him when 1) he didn't challenge voter fraud 2) endorsed Clinton even after learning from the DNC leaks that she and the media screwed him 3) campaigned for her and told us she was the most qualified to be POTUS 4) turned down Jill Stein's offer to run 3rd party 5) and came off like a petty sore loser like all the other Democrats and those in the media. So I stopped listening to him. He sounds like sore grapes now. He was leading ahead of Trump in all the polls, but was so obsessively afraid of losing to him that he supported a corrupt career criminal to challenge him instead.

      And that goes the same for Liz Warren too, for not endorsing Sanders, but endorsing Clinton. So Sanders and Warren are part of the blame for a President Trump, but all they can do is to keep screaming racist, misogynist, xenophobic, Islamaphobic and bigot. It's getting old and it doesn't work.

      Bernie Sanders: Carrier just showed corporations how to beat Donald Trump

      Sanders says Carrier deal sets a dangerous precedent

      Bernie Sanders: Donald Trump Just Let Carrier Take the U.S. ‘Hostage’

      It's Not Just Bernie Sanders Unhappy With Donald Trump's Carrier Deal

  8. ////////////////////////////// UPDATE //////////////////////////

    POLITICO NEWS LETTER (12/8/2016)

    America's tweeter-in-chief on Wednesday night slammed the president of a union local representing workers at the Carrier Air Conditioning plant in Indianapolis. This was the plant where Trump last week announced a deal to keep 1100 jobs in the U.S. "Chuck Jones, who is President of United Steelworkers 1999, has done a terrible job representing workers," Trump tweeted. "No wonder companies flee country!" Later, Trump tweeted that "If United Steelworkers 1999 was any good, they would have kept those jobs in Indiana. Spend more time working - less time talking. Reduce dues."

    Trump was responding to Jones's comment Tuesday to the Washington Post that Trump "lied his ass off" about how many jobs he'd saved at Carrier; the real number, Jones said, was about 800, of which 730 were production jobs. (Trump appears to have gotten to 1100 by including 300 engineering jobs that were never slated for elimination.) Under the agreement that Trump and Vice President-elect Mike Pence struck with Carrier, 600 Indianapolis factory workers will still be laid off.

    "What he did," Jones told the Indianapolis Star Wednesday night, "was he gave false hope for three days to people that worked in that facility that they might not lose their job." Jones also said Trump's tweetstorm "means I'm doing, and we're doing, as labor representatives, the best we can for the people to give them a living wage and good benefits ... What he says, that don't bother me." Jones received death threats, he said, after his quotes criticizing Trump were published Tuesday.

    United Steelworkers President Leo Gerard said he was "disappointed" with Trump's tweets. "Chuck was simply clarifying what had been announced by the President-elect was inaccurate," Gerard told Morning Shift. He added that Jones "fought valiantly" to keep the plant open and helped bring national attention to the plant. "He deserves nothing but praise for what he did and he's a hero to a lot of workers."

  9. Sanders' approach is the right one.

    1. It's too bad so many people voted for Clinton instead of Bernie in the primary, or we would have had Bernie's approach next month.